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Dive Brief:

Salt River Project and SolarCity have reached agreement on broad terms of a settlement to end their ongoing litigation, but according to The Arizona Republic, the deal would leave demand charges in place that were the lawsuit's impetus.

The Arizona Republic reports the deal includes SRP buying a 25 MW battery from Tesla, SolarCity's parent company and develop an incentive program to encourage residential batteries and a new demand charge pilot.

SolarCity sued Salt River Project in 2015 when the public power utility raised rates and instituted a new charge for solar customers that added $50/month to their bills, hurting the value proposition of the rooftop systems.

Under the broad terms, SRP would purchase a 25 MW battery and install it at the Agua Fria Generating Station. The utility would also launch an incentive program rewarding customers for installing storage, and a new demand charge pilot would be created. However the utility's solar demand charge, which launched the lawsuit, will remain in place.

If the settlement is approved, the two sides would move to dismiss all litigation and pay their own attorneys' fees.

The demand charges, adding on average $50 to a solar customer's bill, caused installations in Arizona to plummet immediately following the change. SRP has about 17,000 solar customers, and has seen an increase in solar installations recently despite the charges.

Arizona supports about 9,000 solar jobs and growth of the industry is a major issue in net metering cases around the country. After December 8, 2014, applications for rooftop solar in the SRP territory fell 96%. However, the Arizona Republic reports the utility picked up about 1,700 new solar customers last year.